Cory Booker: Big pharma should have lowered prices

U.S. Sen. Cory Booker, D-New Jersey, was at Ocean Medical Center in Brick on Saturday to participate in a roundtable discussion about the opioid addiction crisis in Ocean County and throughout the United States.
Erik Larsen

After getting a windfall from tax reform, the nation's biggest drug companies handed out bonuses to employees, increased research and development, plotted expansions and set aside billions of dollars to to buy back their own stock.

One thing they didn't do: lower their prices.

"This early snapshot is discouraging," said Sen. Cory Booker, the New Jersey Democrat who represents a state whose biggest industry is pharmaceuticals. Given the giant tax break, "there is no excuse but to act to lower the cost of prescription medications."

That was Booker's conclusion in a report released Monday night that looked at what the 10 biggest U.S.-based drug makers are doing with the extra money they have received from the Tax Cuts and Jobs Act.

The report takes aim at the rising cost of prescription drugs that Booker said has backed consumers into a corner, trying to juggle medication with necessities like rent, food, child care and utilities. But it also puts him at odds with a huge economic force for his state that long has defended its prices.

The senator represents a state with such a rich history of drug research and development that calls itself the medicine chest of the world. And he has had to fend off backlash from liberal groups who have criticized him for defending drugmakers. Last year, he voted against a bill that would have helped Americans import less expensive drugs from Canada.

Booker's spokesperson didn't respond to a request for an interview. Watch Booker discuss the scourge of opioid addiction in the video at the top of this story.

Posted!

A link has been posted to your Facebook feed.

Susan Covington of Brick holds a photo of her grandson Brandon Nikola who died of an overdose in October of 2016. Sen. Cory Booker (D-NJ) attends a roundtable discussion at Ocean Medical Center with Ocean County Prosecutor Joe Coronato, the DEA and health care professionals to discuss the opioid crisis.
Brick, NJ
Saturday, July 29, 2017
@dhoodhood
Doug Hood

He said he wanted to find how they were affected by tax reform championed by President Donald Trump and the Republican Congress. The $1.5 trillion law lowered corporate taxes. Its supporters said it would spark economic growth. Its opponents, including Booker, said it would most benefit the wealthy and increase the deficit.

The report found that five of the companies — Pfizer, Merck, AbbVie, Amgen and Celgene — announced a combined $45 billion in stock buybacks during that period. Only Cisco, Wells Fargo, Home Depot, PepsiCo and Oracle announced bigger repurchase plans during that time.

Companies typically repurchase shares when executives think their stock is undervalued. It reduces the number of outstanding shares, which increases a company's earnings per share, and, ideally its stock price.

Critics say the money companies use to repurchase shares could otherwise go toward employee raises, extra hiring, or expansion projects that would benefit the broader economy and pay off for the companies in the longer term.

Booker said drug companies also could have used that money to give their customers relief. Prescription drug spending grew 12.4 percent in 2014 and 8.9 percent in 2015, before slowing to 1.3 percent in 2016, according to the federal government's National Health Expenditures report.

One beneficiary of the price hikes could be New Jersey's economy. Its pharmaceutical and medical device companies employ more than 78,000 workers. They accounted for nearly 20 percent of the state's GDP as recently as 2014, according to the HealthCare Institute of New Jersey, a trade group.

The industry has long defended its pricing, saying its companies only have several years to recoup their research and development costs before they lose their patents.

"New Jersey’s life sciences community looks forward to continuing to work with Senator Booker on policies that protect patient access to the life-saving medical innovations developed by our companies and that preserve New Jersey’s innovation ecosystem, which is working to find the next generation of treatments and cures for the world’s most dreaded diseases,” Dean J. Paranicas, the group's president and chief executive officer, said in a statement.

Booker said he planned to monitor the companies as they continue to decide how to use their tax breaks.

"Although drug companies have already committed billions of dollars to stock buybacks, billions more dollars in uncommitted savings will be flowing to these companies in the months and years ahead," he said.